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3/02/2009

Bank of America regrets taking government money

Of course, Bank of America did the government a "favor" by taking over Merrill Lynch. The problem was that Merrill's losses were so huge that that BoA found it necessary to take the government money. Ex post Merrill probably would have fought much harder against doing the government a favor. I can't understand what the problem would have been in letting Merrill go bankrupt. The Financial Times as some interesting info here:

Bank of America’s request for $20bn of government money to prop up its acquisition of Merrill Lynch was a “tactical mistake” that made the bank appear as weak as Citigroup, Ken Lewis, BofA’s chief executive told the Financial Times on Monday.

Mr Lewis vowed to stay on as chief executive of the North Carolina-based bank until it paid back the $45bn of government money it received under the US Treasury’s bank recapitalisation programme, possibly within two to three years. This is the first time he has signalled his plans to leave the company.

However, he expressed regret that an “abundance of caution” had led him to take more aid than he said was necessary to absorb Merrill’s $15bn fourth-quarter loss.

BoA received an initial $25bn from the Treasury in September. It requested a further $20bn at the end of December as the scale of Merrill’s losses eclipsed BofA’s initial forecasts. . . . .